Executive Summary: On March 25, 2014, the United States Supreme Court unanimously held that certain severance payments (described as “supplemental unemployment compensation benefits” or “SUBs”) constituted taxable wages for purposes of FICA. See United States v. Quality Stores, Inc. No. 12-1408 (2014). The Sixth Circuit had held that the payments were not wages subject to FICA, in a decision from which the IRS appealed. See In re Quality Stores, Inc., 693 F. 3d 605 (6th Cir. 2012).
Articles Discussing FICA.
This week, the U.S. Supreme Court confirmed that severance pay is subject to FICA tax.
Executive Summary: As promised, the Internal Revenue Service has prescribed special procedures that employers may use in order to retroactively correct FICA withholding and payment following the Supreme Court’s decision earlier this year in United States v. Windsor, and last month’s Revenue Ruling 2013-17 (the “Ruling”), under which same-sex couples are treated as married for all federal tax purposes if they were legally married, regardless of residence. For background, see our previous Legal Alert: IRS Answers Residence Question for Same Sex Spouses, at http://www.fordharrison.com/9568, and the article linked therein.